Burberry announces new boss as sales of British global fashion brand continue to fall

Burberry has become the latest fashion brand to face troubled waters following a slump in sales amid a wider crisis in the luxury fashion sector.

Burberry, one of the UK's leading global fashion brands, has announced it will replace its boss Jonathan Akeroyd with immediate effect after just two years in the role.

He will be replaced as CEO by former Michael Kors boss Joshua Schulman, who will take over later this week.

Burberry made the surprise announcement as it warned it would post a first-half operating loss if retail sales continued to fall at their current pace, having fallen 21 percent on a same-store basis in its first quarter to June 29.

It said full-year earnings will also be lower than expected and suspended its dividend, sending shares down more than 17 percent on Monday.

Gianni Versace's former boss Akeroyd took over Burberry's top job in April 2022 with a so-called “golden hello” worth around £6m and was tasked with returning sales to pre-pandemic levels.

The sector experienced a post-pandemic boom as consumers turned to “revenge shopping” to make up for forced savings during lockdowns.

However, Akeroyd's tenure was hampered by a series of high-profile departures and a slump in luxury retail amid a global cost-of-living crisis – last year saw a major slowdown in sales.

Shortly after joining, its respected chief financial and operations officer, Julie Brown, said she was leaving after six years, while its creative director for nearly five years, Riccardo Tisci, also announced he was stepping down.

Mr Tisci was replaced by former Bottega Veneta creative director Daniel Lee, while Kate Ferry became chief operating officer last year.

In the 13 weeks ending June 29, comparable-store sales fell 21 percent compared with the same period a year earlier. As a result, the company suspended its dividend and is now dealing with around 200 layoffs worldwide.

Burberry shares have more than halved in the past year and fell another 17 percent on Monday.

The only region in the world where Burberry saw sales rise was Japan, up 6 percent. The company has historically relied on its Chinese market, however, consumer spending in China has been weak this year due to problems in the housing market and rising unemployment.

After replacing acclaimed Italian fashion mogul Marco Gobbetti, Akeroyd made it clear he wanted to remind customers of Burberry's Britishness with a renewed focus on outerwear and a new heritage-inspired logo. His plan came amid claims the company had strayed too far from its roots.

However, the attempt to appeal to high-end markets failed and the abandonment of Burberry's signature check print was met with criticism. Prices for the brand's items, such as its iconic trench coat, also skyrocketed.

The cost-of-living crisis hasn't helped Akeroyd either. The luxury fashion house was hit by a 12% drop in store sales in US markets, where it continues to see “a relatively broad decline” in retail customers.

Store sales in Europe, the Middle East and Africa rose 4 percent for the full year but fell 3 percent in the first three months of this year as the region benefited from tourism growth but then struggled with pressure from local consumer spending that fell below double digits in the fourth quarter.

Burberry’s new chief executive, Mr Schulman, said: “Burberry is an extraordinary, quintessentially British luxury brand that combines heritage and innovation in equal measure.

“Its original purpose of protecting people from the climate is more relevant than ever.

“I look forward to working alongside Daniel Lee and the talented teams to drive global growth, delight our customers and write the next chapter of the Burberry story.”